This paper discusses public subsidies aimed at intensifying timber production as an initial part of an evaluation of the profitability of forest investment subsidies in Finland. In many countries there are very few proper ex post evaluations of the forest policy instruments in economic terms. The scarcity of timber among users and their attempts to construct new forest policy are discussed first. The increments in annual growth and growing stock as well as its valuation are then evaluated. The final gross utility increments due to forestry investments are measured through their importance in the forest industry products. The direct and indirect changes in GDP are calculated by using the input-output method.

The paper, presented at the seminar ”Forestry in Europe: Implications of European Integration for National Forestry”, discusses the meaning of the European Community for the forestry sector, putting a special emphasis on recycling. Subsidies and the so-called ”Forestry Action Program” are among the topics that have raised controversial discussions within the EC. In addition, wood fibre recycling and the EC draft directive on packaging waste includes ambiguous targets for recycling.

To conduct an efficient forest policy, both a normative and a positive theory are necessary. In addition, however, the explicit intertemporal considerations in natural resource economics demand that it is made crystal clear which means are permanent and which are non-permanent. The permanent case is far from easy to solve.

That the theoretical problems have practical relevance is shown by Swedish experience. A practical course of action is to weight possible positive effects from a permanent subsidy against possible deleterious outcomes. It is also desirable to avoid jerkiness in forest policy, which is likely to create uncertainty about the permanence of permanent means.

Law may sometimes be more efficient in creating ”credibility” than economic incentives. Regeneration has been mandatory in Sweden since 1903, and nobody refrains from cutting because he believes that regeneration duty will be abolished in some near future.

Private forestry in the Federal Republic of Germany mainly consists of small holdings. Out of 534,000 proprietors 97% own 0.01–10.0 ha. This category covers 45% (1.4 million ha) of private woodlands in total. During the last decades cooperation has increased so that now about 50% of the small woodland is managed by voluntary cooperatives. The main aim of the cooperatives is the improvement of management by trying to overcome the disadvantages arising from small size, unfavourable location and splitting up, as well as from insufficient accessibility and other structural difficulties.

An economic analysis of forestry cooperatives was conducted by using a combination of model calculations and field investigations of 20 forestry cooperatives which represented different types of cooperation in all regions of the country. The theoretical calculations showed the amplitude of efficiency improvement in small holdings by means of cooperation. It was shown that there were relatively poor results in the beginning and success could be achieved only in the long-term view by improving quality of stands. According to the analysis of the 20 cooperatives, the possible annual cutting rate was 4.1 m3/ha, but the actual cutting rate reached only 3.7 m3/ha. Aims of the cooperatives manly concerned coordination of production, mechanization, material acquisition and timber sales. The subsidization of forestry cooperatives proved, in general, to be insufficient. A discussion of different ways of subsidization showed that from the microeconomic point of view direct product subsidies of timber production may be more favourable than area-based grants.

The study attempts to establish to what extent the present regional allocation of the forest improvement subsidies equalize the profitability of forest drainage in Finland. The benefit/cost ratio has been used to describe the regional variation of the profitability

The study revealed that the forest improvement subsidies granted in 1968, even the highest possible subsidies, did not equalize the profitability of forest drainage. According to the results, the northern regions are at a disadvantage compared to the southern parts of the country. To fully equalize the profitability of forest drainage the average subsidies granted in 1968 should have been raised in the second financing zone from 22 to 32%, in the third zone from 32 to 60%, and in the fourth, northernmost zone from 43 to 86%. The study also suggests that the boundary lines of the financing zones should run, at least in Central and Northern Finland, from southeast to northwest instead from east to west, as it is now.

Silva Fennica issue 46 includes presentations held in professional development courses, arranged for foresters working in public administration in 1937. The presentations focus on practical issues in forest management and administration, especially in regional level. The education was arranged by Forest Service.

This presentation discusses the means Finland has used to promote agriculture and forestry in the country.